As organisations receive more funding, the value of extra funding changes. This is relevant for donation decisions. People have used various concepts to discuss this feature:
- Room for more funding
- Funding gaps
- Diminishing (marginal) returns
In this pair of posts I discuss what people might mean by these different terms:
- Defining returns functions and funding gaps sharpens up the definitions of these terms.
- Selecting the appropriate model for marginal returns analyses the strengths and weaknesses of different models
The second post is co-authored with Owen Cotton-Barratt. He provided many of the ideas in the posts.
In response to your first paragraph, I think it's true that GiveWell will have more information about any changes in the returns function. For the reasons given the in the second post, I think it's unlikely that GiveWell charities do have inflection points in their returns functions. I'm not sure from GiveWell's writing whether they think that there are inflection points or not (In particular, I don't think they take a clear stance on this in the linked post).
I think your second paragraph is answered by footnote 1 of the first post. I don't fully understand how your third and fourth paragraphs relate to the posts. Are you simply arguing that a fuller analysis would incorporate the size of individual donations, not the total level of funding? This seems like a plausible extension.
On increasing and decreasing (marginal) returns:
I see that you said "claiming that expected returns are normally diminishing is compatible with expecting that true returns increase over some intervals. I think that true returns often do increase over some intervals, but that returns generally decrease in expectation."
I wasn't sure why this would be true in a model that describes the organization's behavior, so I spent some time thinking it through. Here is a way to reconcile increasing returns and decreasing expected returns, with a graph. Note t... (read more)